Nearly half a dozen years after it banned life insurance companies from offering health insurance products, the insurance regulator — Insurance Regulatory and Development Authority of India (Irdai) — is mulling allowing it again as the new chairman is relooking at long-pending changes to enhance penetration of insurance in the country, reported The Economic Times.
Allowing life insurance companies to offer health plans is one of the big decisions in front of Irdai chairman Debasish Panda, who has vowed to simplify regulations and capital requirements and introduce new products to widen insurance penetration in the country.
“Allowing life insurance companies to manufacture and distribute health plans has been a bone of contention in the industry because general and standalone health insurance companies are clearly opposed to it. But a decision will have to be made especially as a committee to evaluate this feasibility more than two years ago has submitted its report,” said the CEO of a life insurance company.
The nine-member committee cochaired by LIC chairman MR Kumar and former New India Assurance chairman G Srinivasan was formed in February 2020 to examine the feasibility and business scope for life insurance companies to offer indemnity-based health plans.
“The committee had sent its recommendation more than one-and-a-half years ago. But since the life insurance members were outnumbered in the committee, all it could suggest was allowing life insurance companies to be distributors of health plans, though the demand has always been to enable life insurers to offer health because it is a natural combination rather than clubbing it with general insurance products like motor,” said a member of the committee.
Industry captains say a new chief at the Irdai along with the recent public listing of LIC could alter the status quo in the industry.
Allowing life insurers to offer health plans will dent the fortunes of standalone health insurers and general insurance companies. The regulator will also have to take into account their complaints, especially at a time when there has been increased awareness of these products post-Covid.
It is unclear whether Irdai would want to take a fresh look at health insurance or will rely on already existing submissions by previous committees in this regard.